Revision date: January 3, 2019

For an updated copy of this booklet, check out the Reference Materials page of our website: https://www.cuanswers.com/resources/doc/cubase-reference/

CU*BASE® is a registered trademark of CU*Answers, Inc.

Indirect Lending

Ready to Look

INTRODUCTION

If your credit union is looking to partner with an indirect lending platform

CU*BASE works with multiple vendors to bring those loans to the core. The Ready to Look model allows you to bring in loan applications from a third-

party vendor and work them in the CU*BASE loan queue, including

underwriting and funding.

CONTENTS

OVERVIEW 2

GETTING STARTED 3

CONFIGURING CU*BASE 4

CONFIGURING EXTERNAL LOAN DELIVERY CHANNELS 4 CONFIGURING LOAN PRODUCTS FOR INDIRECT CHANNELS 9

CONFIGURING DEALERS IN CU*BASE 11

INTEGRATING CU*BASE AND INDIRECT DEALERS - 13

INTEGRATION MANAGER USER GUIDE 13

WORKING WITH LOAN APPLICATIONS FROM EXTERNAL DEALERS 14

REQUESTING A COUNTER OFFER (2-WAY COMMUNICATION) 15 BOOKING THE LOAN 17

LINKING INDIRECT LOANS 22

MANAGING DELINQUENCY RISK OF YOUR INDIRECT LENDING PORTFOLIO 23

2 Indirect Lending

OVERVIEW

Selecting an Indirect Lending Vendor

Get started by investigating the indirect lending vendors available that

interface with CU*BASE. Perhaps customers in the area have already

selected a partner, and this decision has already been made for you, but if

not, we have created a full-featured website allowing you to evaluate all your

options (shown on the next page)

Configuration of Delivery Channel and Indirect Loan Products

in CU*BASE

During this stage you will configure delivery channels in CU*BASE,

including the ranges and ages of collateral that you will accept for each year.

You will also configure your loan products for indirect channels.

Setting up the Communication Between the Lender and the

CU*BASE Loan Queue

Using the Integration Manager website, you will set up your users and

assign passwords. You will also add the dealers from whom you will be

receiving the offers.

Reviewing a Loan in the Loan Queue

Once this setup is complete, you are ready to begin receiving loans in the

CU*BASE loan queue. Loan applications will appear in the queue just like

other loan applications. You will know that the application is an indirect

loan because it will have the two-digit code used by your vendor.

Approving or Denying the Loan/Making a Counter Offer

You will work the loan application by selecting them on the loan queue. If configured, you will provide a counter offer to the dealer. Once all details are

in order, you will create the loan from the Loan Recap screen. You also can

deny the loan application.

Indirect Lending 3

GETTING STARTED

To select an Indirect Partner and begin your work with Lender*VP, select the

indirect partner you would like to work with in the CU*Answers store. In the

CU*Answers store select Lender*VP and then Indirect Lending. A selection of

indirect partners is available. There is even an option to select a vendor not

listed in the store. Access the page directly via this URL:

https://store.cuanswers.com/product-category/lendervp/indirect-lending-

lendervp/

4 Indirect Lending

CONFIGURING CU*BASE

CONFIGURING EXTERNAL LOAN DELIVERY CHANNELS

The indirect lending delivery channel is the first link to a third-party source

of loan applications through the “XML Lending Gateway.” If your credit union has been set up to use this channel, you may access various

configuration screens here that will allow you to define which CU*BASE loan

products correspond to incoming DealerTrack loan applications, including

free-form text for stipulations to be communicated back to an automotive

dealer via the DealerTrack software.

General Information

Loan Delivery Channel Configuration (Tool #462)

This is the first of several screens used to configure default settings used by

loan delivery channels. In this context, a Delivery Channel is simply a source of loan applications funneled from any source into the CU*BASE loan

application database.

For details, refer to the booklet, Online Credit Bureau Access and 247

Lender: Configuring 247 Lender and the Approval Matrix.

Close-Up View of the Entry Screen

Indirect Lending 5

Select the DealerTrack (DT) delivery channel and Change or View to move to

the detail screen.

Detail Screen (Screen 2)

• TIP: Always assign your delivery channel to branch 01 unless you

have an indirect department at another branch. Then use that

branch. (If your indirect dealer is only at branch 03, then use that

branch.) This is since you sort the loan queue by branch when

working the loan app (or if you use the filters to sort by delivery

channel). It makes it easier to find the loan applications that are coming in through the indirect process to work them.

• TIP: It’s a good idea to create an employee ID for this process called

“DT DealerTrack” or “IN Indirect.” This way you can set up a user

that does not have menu security assigned to it. (In the comment line

in the security screen add that there is no menu access. This is

helpful for auditors.

After using Enter you will advance to this second detail screen.

Second Detail Screen (Screen 3)

All incoming

applications will be

assigned to this

branch.

It is recommended that

you use a non-employee user ID as this is only

used for the Interviewer

ID.

If you have a

decision model, these

codes are automatically

assigned to the

incoming app loan

based on the

decision results.

Check this box if no credit

report is needed.

.

Each type needs its

own loan product

cross-reference and

dealer stipulations.

Check this box if the loan

should use the GOLD

amortization calculations.

.

6 Indirect Lending

These are all the loan types you could potentially see coming in from this

channel. (What appears on this screen is dependent by vendor.)

Select the loan type and Change to attach the loan product.

Attaching a Loan App Delivery Channel

Credit unions can configure multiple vehicle years with a variety of products

(that can be attached to the same year of the collateral) with any length of

term. This screen lists the products associated with the various collateral

years. CU*BASE uses this and applies it to incoming loan applications from

indirect-delivery channels.

Attaching the Loan App to a Delivery Channel (Screen 4)

Use Add (F6) to add additional products for new, used and demo loan products for collateral years you select.

If you renumber your loan products that are attached to this table, you will

need to reconfigure this table as well. Deleting a collateral type on this

screen will not affect existing loans or loan applications.

• NOTE: Collateral years will need to be updated each year to keep

your products in line with current vehicle offerings.

Indirect Lending 7

Close-Up of Screen 4 (Show on Previous Screen)

This screen shows the loan terms (in months) for “new,” “used,” and “demo”

items.

• NOTE: Indirect-delivery channels support loan applications that are

submitted for any length of term. For example, if a dealer selects a

new car with a term of 67 months, CU*BASE assigns the percentage

rate of the next higher term product. If the credit union also has a DealerTrack product with a 72-month term and a rate of 7%, then

this loan application will be accepted in CU*BASE with the 67-month

term at 7%.

• TIP: It is a good idea to create a date range outside the parameter you

generally accept to catch loans that you might not generally

underwrite, to build a delivery channel that falls outside of your range (older collateral year range for example). These may not be

approved as is but can then be worked with the counter offer feature.

This is done in the CU*BASE side since this loan does not

immediately go back to the dealer.

• NOTE: When setting up the initial delivery channel configuration a Lender*VP team member will handle the initial configuration. After

signing up with a vendor of your choosing please have a copy of your

current rate sheet for the products you plan to offer.

From this screen select a year and Change to modify a loan app delivery channel on the detail screen.

These ranges are

for the age of the

collateral. CU*BASE loan product codes for “new,” “used,” and “demo” items.

8 Indirect Lending

Loan App Delivery Channel Detail Screen (Screen 5)

Use this screen to associate different products (for new, used and auto) with

a selected range of collateral years. Enter the collateral year range. Then use

the lookup to select the appropriate products for new, used and demo. Enter the stipulations you would like to be sent back to the dealer for every loan

application. (This goes out to the dealer with the approval or counter offer.)

What do you want to tell the dealer you must have to close the deal? Press

Enter to save. This stipulation will now be available to copy to additional

years.

When you create additional products on this screen, use Copy in Stipulation

(F18) (see bottom button of the screen above) to copy the saved stipulations to the new product. You will be presented with a list of the existing products.

Select the stipulation to copy. (You can always tweak the stipulations after

you copy them.)

For your CU*BASE

loan product codes.

Use this section to

populate the “Loan

Stipulation” section.

Indirect Lending 9

CONFIGURING LOAN PRODUCTS FOR INDIRECT CHANNELS

Loan Product Configuration (Tool 470), Select a Loan Product, and then

“General Loan Information”’

• TIP: Loan products can even be set up exclusively for use by external

delivery channels.

Some things to consider when creating products exclusively

for your external delivery channels:

• Are your prices the same for your member direct loans as for

your external delivery channels? Check your “Product code base

rate.” (See picture above.)

• Are your procedures the same? Return to the Loan Product entry screen and select “Checklist” from the next window.

• How are you managing the risk-based pricing for external

delivery channels? Use Enter from the screen shown above to see

the screen on the next page.

Check the box next to “External loan delivery channels” if you want

this product to be available for one or more of your delivery channels.

Are your prices the

same for your

member direct loans

as your external

delivery channels?

These are the settings

that will be used when applications are

received via an

external delivery

channel

10 Indirect Lending

Loan Product Configuration - Risk Based Pricing

This screen shows the risk-based pricing set up for the loan product.

Indirect Lending 11

CONFIGURING DEALERS IN CU*BASE

In addition to setting up loan delivery channels, you will also need to

configure your dealers in CU*BASE.

Configure Dealer Info for Indirect Lend. (Tool #245)

This is the first of two screens used to set up dealer information, including

name and address, contact information, and reserve percentages. Each

dealer is assigned a unique number for tracking purposes.

• From here you can add or change a dealer. This will take you to the

screen shown on the following screen.

• You can suspend a deader. To then show the suspended dealer, use

the Show Inactive (F11) button.

• If you elect to delete a dealer and loans exist with the dealer, a

window will appear for you to enter a replacement dealer.

12 Indirect Lending

Configuring Indirect Dealer Information (Detail)

This is the second screen used to add or modify dealer information. In

addition to name and address information, this screen is also used to record

the reserve percentage allotted for this dealer. Each loan amount that is

attached to this dealer will be multiplied by this percentage to calculate the

reserve amount.

All fields are optional, except for the Dealer # and Company Name. Below is

a description of the fields used to calculate the reserve percentage and

monthly reserve expense.

Field Description

Reserve % (Optional) This field is used to record the reserve

percentage allotted for this dealer. Enter an amount

using three places past the decimal point. All loans

attached to this dealer will be multiplied by this

percentage to calculate the reserve amount.

For example, if this dealer receives a reserve of 1.25%

for each loan sold to the credit union, enter 01250

here (as shown above.)

Default reserve

amortization term

(Optional) Used for calculating the monthly reserve

expense when the loan is linked to a dealer but can be

overridden at the loan level. This field is not required and can be added when the loan is linked to the

dealer.

Indirect Lending 13

INTEGRATING CU*BASE AND

INDIRECT DEALERS -

INTEGRATION MANAGER USER GUIDE

After adding the dealers to CU*BASE, you also need to add them to the

Integration Manager that provides the connectivity between the indirect

dealer and CU*BASE.

Use the Integration Manager User Guide to learn more about:

• Adding a user

• Assigning and changing a password

• Adding a new dealer

Access this booklet with the following link:

https://www.cuanswers.com/wp-

content/uploads/IntegrationManagerUserGuide.pdf

14 Indirect Lending

WORKING WITH LOAN APPLICATIONS

FROM EXTERNAL DEALERS

Just like any loan request, the loan request from the indirect lender appears

in the Loan Request Queue.

Loan Request Queue

Identifying Loans from Indirect Lenders

You can identify it as an indirect loan request because the DC column

contains the two-letter indicator for the vendor. (In the example above, DT

stands for DealerTrack.) You can also apply a filter the loan to show only

loans from a specific vendor by using the Delivery Channel filter at the top of

the screen.

DealerTrack and RouteOne support the ready to look model and Counteroffer Exchange, so the following section will cover this process. If the

vendor was “ready to book,” the loan officer would simply book the loan by

creating it. (This is the final step of the “look to book” process.)

The DT in the DC column indicates that

this request comes

from an indirect

lending channel

(DealerTrack).

Indirect Lending 15

REQUESTING A COUNTER OFFER (2-WAY COMMUNICATION)

If your vendor is Route One or DealerTrack, you can use the Counteroffer

Exchange interface to request a change of the loan request.

• For example, you might want to change the term of the loan from 72

months to 68 months.

The Counteroffer Exchange supports the exchange of comments between the

dealer and the credit union.

1. After the lender submits a loan request to the credit union, the credit

union has an option to place a counteroffer decision on the loan.

2. The lender has the option to post comments to the credit union

through their management system. (NOTE: The lender can send

comments in the initial loan request. There is a three-message limit

per request.) 3. When the lender submits comments, the credit union receives an

email notification and can use a link provided to accesses the

Counteroffer Exchange portal to reply to the message. Messages can

be exchanged back and forth in this manner.

4. The credit union approves or declines the loan request.

Email Notifications

On the CU side of this process, the email notification is the trigger that

begins the Counteroffer Exchange conversation. When the dealer submits a

comment, the CU will receive a notification that contains a URL. This URL

will take the user to the Counteroffer Exchange portal. Once there, the CU

will be able to view the conversation and post back their comments if they

wish.

An example of the email notification:

The Portal

After following the link provided in the email notification, the CU is taken to

the Counteroffer Exchange portal. This is where they can view information about the deal, the conversation history, and submit a reply to the

conversation. If there is a decision applied to the application, the decision

will appear as a different color and provide the stipulations from the decision

as part of the conversation.

To post a new comment, the user will type the message in the box and click Send. Assuming the new comment is successfully posted, they will receive a

success message and the conversation history will be updated.

16 Indirect Lending

Counteroffer Exchange Portal

Message Archival

During the Counteroffer Exchange conversation, each message that is exchanged is stored within the CU*BASE system. These messages are

archived in the collateral comments for the target application.

Collateral Record with Counter Exchange Notes

Indirect Lending 17

BOOKING THE LOAN

Once the loan is submitted by the vendor, it will appear in your loan queue.

You will work it as any other loan application. Following are directions for

what you will do when you book these special kinds of loan applications.

Notifications

Your vendor may support notifications when an indirect dealer loan request

appears in your queue. Contact Lender VP for details on how to sign up for

these notifications.

Indirect Lending Application – Loan Request Recap Screen

At this point you are ready to book the loan. From the Loan Request Recap

screen select Create Loan Account as usual. This will take you to the Loan

Creation screen.

18 Indirect Lending

Loan Creation Screen

Since this is an indirect loan, Link to dealer is checked by default. In order to

print a check to the dealer, also check Disburse funds as shown above.

Then you may need to enter a Collector ID. Use Enter to move to the screen

where you link the dealer to the loan.

Indirect Lending 19

When you first come to the Link Dealer to Member Account screen (shown

below), the Reserve % and Reserve Amortization term fields will be blank.

Select a dealer and if they are configured in the dealer configuration, you can

use Enter to fill in the Reserve % and Reserve amortization term. You can

also manually enter this information.

• You can override the default Reserve % and Reserve Amortization term. In this case click Recalc Reserve Amt (lower right button) to

recalculate the Reserve amount.

Select whether this is a dealer loan or dealer lease with the Dealer Relationship type selections.

Link Dealer to Member Account Screen

The loan is now linked to the dealer. Now use Save/Update (F5) to move to

the disbursement screen.

20 Indirect Lending

Loan Disbursement Screen (Upon Entry)

Upon entry, the Loan Disbursement screen displays the loan information and allows you to disburse to the member. To select the dealer as the payee,

select Pay To Dealer (button lower left). A pop-up window appears showing a

list of dealers configured on the system. Select a dealer from the list, and the

dealer information will populate the Pay to the order of section of the screen.

Loan Disbursement Screen (Dealer Pay to Information Included)

Indirect Lending 21

Loan Disbursement Screen (Check Amount Entered)

Enter the amount of the check in the CU Check field and use Enter. An

OFAC scan will be run.

OFAC Scan

Complete the OFAC scan, and then use Cancel (up arrow). The check will

print at your check printer.

22 Indirect Lending

LINKING INDIRECT LOANS

You can view your indirect loans in a dashboard format, where they can be

viewed, updated or deleted.

Tool #438 Link/View Member Loans

This screen is used to attach individual member loan accounts to a specific

dealer. When reserve amounts are calculated, all loan accounts which have

been linked using this screen will be included in the total reserve for that

dealer.

To link a loan use Add/Link (F6). This will reveal a pop-up window that will

allow you to link the loan. When done, use Save/Update (F5) to return to

this dashboard.

• There are two views for this screen: one showing current balance

information and the other showing disbursement limit. Use the toggle

(F10) to change what is displayed in the column.

• If you see a W in the Closed column, this means that the loan has

been written off. If you see a C in the Closed column, this means that

the loan has been closed.

• NOTE: This functionality is allowed only for closed end loans.

Indirect Lending 23

MANAGING DELINQUENCY RISK OF

YOUR INDIRECT LENDING PORTFOLIO

You may want to re-evaluate your business decision to work with a vendor

based on the ratio of delinquent loans initiated at that location. To do so use

Tool #641 Print Dealer Member Delinquency.

Tool #641 Print Dealer Member Delinquency

From this screen you can use the multiple Select button to filter by dealer.

Use Enter to print the report, shown below.